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England’s council funding system ‘unsustainable’

The total amount of funding available to councils in
England will become increasingly inadequate over the coming years, largely
because of social care demands, a report has warned.

The Institute for Fiscal Studies (IFS) found
that overall spending on local services by English councils fell by 21%
between 2009-10 and 2017-18.

Some services have seen much deeper cuts. Spending on
planning and development and housing services, for example, fell by more than
50%.

The IFS said this has allowed councils to protect social
care services from the full force of budget cuts. Spending on adult social care
fell by 5% between 2009–10 and 2017–18, although the numbers receiving care
fell by much more.

The report warned that the total amount of
funding available will become increasingly inadequate, despite an end to
overall budget cuts. This is because current plans envisage councils relying on
council tax and business rates for the vast bulk of their funding – and
revenues from these taxes are unlikely to keep pace with rising costs and
demands, the report said.

With annual increases to council tax of 3% (the maximum
councils can increase it without a referendum if powers for extra increases for
social care lapse as planned), rising costs and demands mean that adult social
care could require 60% of local tax revenues within 15 years, up from 38% now.
Without additional funding, this would mean cuts to other services.

Even if council tax was increased by 4.7% a year (the
average increase this year including the extra increases ring-fenced for social
care), adult social care could amount to 50% of local tax revenues.

The IFS concluded that there are two choices: either
councils have to be provided with additional revenues to enable them to
continue providing existing services; or government and society must accept
that councils can afford to provide fewer or lower quality services than they
currently do.

David Phillips, an associate director at the IFS and an
author of the report, said a proper national debate is needed to avoid the
services councils provide being gradually eroded.

Steven Cameron, pensions director at Aegon, said
that when government publishes proposals for a stable and sustainable way of
sharing social care costs between the state and individuals, it must tackle
geographical differences in demand for social care.

“There are dramatic differences in age profiles between
regions, with cities tending to have a younger age demographic than rural
areas,” he explained. “In Dorset, for example, 13% of the population are aged
75 and over which compares to just 5% in the London region. While younger age
groups place different demands on local councils, the projected rocketing
demand for social care driven by our ageing population will create huge funding
pressures.”